Thatcher’s Dream Smashed as Homeownership in Southampton Drops

 

In her first conference speech as the Tory's new leader in 1975, the grocer’s daughter from Grantham, Margaret Thatcher, asserted her conviction in a ‘property-owning democracy’.

 

Although Thatcher didn't conceive the saying – (that credit belonged to Conservative MP Noel Skelton in 1923), it encapsulated what she thought Britain should be.

Through prudence, saving and hard work, she believed that everyday British families should be able to purchase their own homes. Thus, giving them security, self-esteem and independence and freeing them from the nanny state of local authority landlords.

Although that idea was a Labour idea initially in the mid-1970s, Margaret Thatcher introduced legislation (Right-To-Buy) in 1980 to allow local authority tenants to buy their own council homes at significant discounts. In the 1980s, homeownership boomed (although it had been on the increase for the previous two decades), and she led the country in an economy with which house buying became a national passion.

 

Between 1981 and 1990, home ownership went up from 11.88m to 15.47m.

 

The other lesser-known fact of the Right-to-Buy legislation in 1980 was it stopped local authorities from building new council houses.

 

Fundamental to her idea was that government (central or local), which had built between 30% and 45% of all homes in the 1950s, 60s and 70s, should stop providing homes and let the market provide them.

The proportion of homes owned rose from 55.4% in 1980 to 65.7% during Thatcher's reign as PM.

A few days ago, the housing element of the 2021 Census was released, and it has shown the proportion of home ownership had fallen to its lowest level since 1985. 

The proportion of households owned in the country fell from 64.1% to 62.5% between 2011 and 2021, the lowest level for the past 37 years, when the figure was 61.6%.

In the meantime, the proportion of privately rented households has surged to its highest since the late 1960s, with 20.4% of households renting from a private buy-to-let landlord.

This means the proportion of British households in private rented accommodation has more than doubled in the past two decades, from the 9.5% recorded in the 2001 census.

So, let’s look at the local stats for the Southampton council area.

 

The percentage of households owned in Southampton has dropped from 49.7% in 2011 to 48.7% in 2021.

 

But would it surprise you to know that even though the percentage/proportion of homeownership has dropped, the actual number of households owned has increased!

 

The number of owned households in Southampton has grown from 48,873 in 2011 to 49,899 in 2021, a rise of 2.1%.

 

So, what explains the contradiction of reducing homeownership, yet the number of households owned has increased?

One simple reason – the number of privately rented accommodation has grown even more!

 

The number of privately rented households in Southampton has grown from 25,501 in 2011 to 29,994 in 2021, a rise of 17.6%.

 

 

Over the coming weeks and months, I intend to drill down further into these stats nationally and locally.

Even though homeownership has increased in terms of pure numbers, the proportion of homeowners with a mortgage has dropped.

Just some headlines to whet your appetite.

As I said above, 64.1% of householders in Britain owned their own home in 2021 (of which 30.8% owned their home outright and 33.3% with a mortgage).

 

In 2021, of the 62.5% of homeowner households, those without a mortgage has increased to 32.8%, and those with a mortgage has dropped to 29.7%.

 

So, has Thatcher's dream been smashed?

Of course, nationally, home ownership is at the lowest level in many decades due to several factors, including the late 1980s and 2008 housing crash, negative equity, the credit crunch and increased mortgage regulation. 

Yet, at the same time, as every single local authority in Britain has seen an increase in the number and proportion of private renters over the past 20 years, the entrepreneurial property-owning spirit has moved into the ownership of private buy-to-let property. The market has undoubtedly filled the housing gap that the councils and local authorities left in the 1980s.

These are interesting times, and I shall share more insights in the coming weeks and months.

Let me know your thoughts on the information above.

Southampton Property Market Holding up Despite Doom and Gloom in the Newspapers

The Southampton housing market over the last three months is now becoming more ‘normal’ after the last couple of years of insane demand when the lockdowns started a race for space!

Even with the blackening economic doom-mongers forecasting a harsh slowdown in the British property market, the number of people buying and selling their homes is still very good for the time of year.

Whilst many homeowners are reducing their asking prices, it is not the 20% (some even said 30%) drop some property commentators and newspaper journalists had predicted.

Looking at the stats for Southampton for the last three months since the disastrous Truss mini budget – they make good reading.

Of the 943 Southampton properties that have sold (stc) since late September, the average length of time it took to achieve a sale was 42 days.

Interesting when you split it down by price, in Southampton:

·        Under £100k – 102 days

·        £100k to £200k – 54 days

·        £200k to £300k – 34 days

·        £300k to £400k – 41 days

·        £400k to £500k – 44 days

·        £500k to £1m – 55 days

·        £1m and above – 98 days

And by type:

·        Southampton Apartment/Flat – 54 days

·        Southampton Terraced/Townhouse – 34 days

·        Southampton Semi-Detached – 35 days

·        Southampton Detached – 45 days

 

The latest sold price data from the Land Registry shows that Southampton house prices currently remain 11.4% higher than they were 12 months ago; the rate of growth has dropped significantly.

Last month, Southampton house prices only rose by 1.2%; thus we are seeing the first sign that the property market is starting to cool.

With interest rates at 3.5% and further increases likely in 2023, that will undoubtedly spur ongoing cooling in Southampton property values yet it’s doubtful we will see the Southampton property market go into the deep freeze that many doom-mongers were predicting.

As I said in recent articles on the Southampton property market, we will see a 5% to 10% reduction in Southampton house prices over the next 12 to 18 months.

That will only take us back to the prices achieved in mid/late 2021 or early 2022 (depending on the property type).

Landlords have experienced double-digit rent growth in the last 12/18 months with a shortage of rental properties coming onto the market. I cannot see this changing in the short term, so I expect rents to be a further 10% higher by Christmas 2023.

Last week I stated it is not always wise to only focus on house prices but also take reference from the number of property transactions completed that feeds the fire of the British property market.

 

For example, in March 2021, 135,670 properties sold, yet a month later, it dropped to 87,600. A couple of months later, it rose again in June 2021 to 165,290 homes sold (for it to drop to 64,000 in July).

Whilst this is good news for estate agents and removals companies, it can skew the property market and put undue pressure on the property market (pressure which could cause a housing crash if not put under check).

Like most things, slow, steady and consistent is the preferred option for the property market. Throughout 2022, the number of properties selling in the UK has been a steady average of 68,832 per month, ranging from a low of 61,800 in January 2022 to 72,200 in July 2022.

 

This consistency will continue into 2023 and a return to a more 'normal' housing market.

One final thing I have noticed about the Southampton property market in the last six months is the number of larger properties coming onto the market that last sold over 25 years ago.

Homeowners in their 20s, 30s and early 40s tend to move every five or six years, yet when they reach their late 40s and 50s, they tend to stay put for longer. These properties only tend to come on the market when people pass away or must be sold for nursing home fees.

These mature homeowners are downsizing for several reasons. Their children have flown the nest and they are rattling around in homes with accommodation they don’t need. Many are being driven to sell their large homes in light of mounting energy bills, high inflation and never-ending maintenance costs that larger properties demand.

The second reason is that the recent rises in Southampton house prices has meant the money released to downsize has grown, meaning if these mature homeowners sell up and cash in to more manageable properties, the amount of money released is quite impressive.

In conclusion, 2023 is going to be a more 'normal' year, akin to the 2016 to 2019 years. Southampton homeowners need to be realistic with their pricing, yet as over eight out of ten sellers buy another home, the one you buy will be lower.

If you are considering selling your Southampton home in 2023 and would like a chat about your options, feel free to drop me a line or call the office.